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What the abolition of Section 21 will mean for landlords

Industry Insight June 16th, 2022
What the abolition of Section 21 will mean for landlords

The government has announced its proposals for the Renters’ Reform Bill, outlined in their Fairer Private Rental White Paper

The proposed reforms include abolishing Section 21, and so-called no-fault evictions, which would mean that landlords would end tenancies without giving a reasonable legal reason.

The proposed ban on no-fault evictions aims to tackle unscrupulous private landlords who evict tenants without giving a justifiable reason. 

Levelling Up and Housing Secretary, Michael Gove says that the ban of section 21 aims to put an end to unsafe homes and “provide a better deal for millions of renters in England.” 

“Removing Section 21 will level the playing field between landlord and tenant, empowering tenants to challenge poor practice and unjustified rent increases, as well as incentivising landlords to engage and resolve issues,” the White Paper says.

According to the BBC, there have been over “227,000 no-fault evictions over the period of three years.” No-fault evictions are the single most significant cause of homelessness in England and the new ban has set out to tackle this.

In Scotland, no-fault evictions are already banned for tenancies starting after the 1st of December 2017. 

 

The effect on landlords

The abolition of Section 21 will mean that landlords will always need to give their tenants a reason for ending a tenancy, for example, wanting to sell the property or breach of contract.

While the proposed ban of Section 21 aims to curb unfair evictions of tenants, it would also make it difficult for landlords to evict tenants who are causing real problems, such as missing rent payments. 

Currently, many landlords use Section 21 notices to quickly remove problem tenants, protecting them from losses and stress. If this route is banned, landlords will have to serve a Section 8 notice or wait for the court to process and discuss their case before they can recover lost rent.

Taking tenants to court can result in financial losses due to further missed rent payments and court action. 

An increase in landlord-tenant disputes would make it even more difficult for tenants to be taken to court for breaching their tenancy contracts, which can increase potential losses. 

To tackle this, the White Paper also proposes a partnership with the Ministry of Justice (MOJ) and HM Courts and Tribunals Service (HMCTS), to introduce a package of “wide-ranging court reforms that will target the areas that particularly frustrate and hold up possession proceedings”. 

 

The effect on tenants 

According to the BBC, many renters have complained about being evicted from their homes after receiving a Section 21 no-fault eviction notice, with no warning. Most renters receiving these notices have had to find a new place and some have had to relocate to afford the rent.

By banning Section 21, tenants would no longer be able to be evicted without proper reason and have to move on short notice. As long as tenants provide two months’ notice to the landlord, they will be able to choose to end the tenancy at any time.

This would give renters longer-term security and protection against unfair and sudden evictions by landlords, such as being evicted for making complaints about faulty appliances and fixtures, giving them peace of mind surrounding their living situation.

 

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